|
on Labor Markets - Supply, Demand, and Wages |
| By: | Hellsten, Mark; Khanna, Shantanu; Lodefalk, Magnus; Yakymovych, Yaroslav |
| Abstract: | Artificial intelligence (AI) is expected to reshape labor markets, yet causal evidence remains scarce. We exploit a novel Swedish subsidy program that encouraged small and mid-sized firms to adopt AI. Using a synthetic difference-in-differences design comparing awarded and non-awarded firms, we find that AI subsidies led to a sustained increase in job postings over five years, but with no statistically detectable change in employment. This pattern reflects hiring signals concentrated in AI occupations and white-collar roles. Our findings align with task-based models of automation, in which AI adoption reconfigures work and spurs demand for new skills, but hiring frictions and the need for complementary investments delay workforce expansion. |
| Keywords: | Artificial intelligence, Labor markets, Hiring, Task content, Technological change |
| JEL: | J23 J24 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1692 |
| By: | G. Jacob Blackwood; Cindy Cunningham; Matthew Dey; Lucia Foster; Cheryl Grim; John Haltiwanger; Rachel Nesbit; Sabrina Wulff Pabilonia; Jay Stewart; Cody Tuttle; Zoltan Wolf |
| Abstract: | We present new empirical evidence suggesting that we can better understand productivity dispersion across businesses by accounting for differences in how tasks, skills, and occupations are organized. This aligns with growing attention to the task content of production. We link establishment-level data from the Bureau of Labor Statistics Occupational Employment and Wage Statistics survey with productivity data from the Census Bureau’s manufacturing surveys. Our analysis reveals strong relationships between establishment productivity and task, skill, and occupation inputs. These relationships are highly nonlinear and vary by industry. When we account for these patterns, we can explain a substantial share of productivity dispersion across establishments. |
| Keywords: | productivity dispersion, tasks, skills, occupations |
| JEL: | D24 J24 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-63 |
| By: | Hellsten, Mark (University of Tubingen); Khanna, Shantanu (Northeastern University); Lodefalk, Magnus (The Ratio Institute); Yakymovych, Yaroslav (Uppsala University) |
| Abstract: | Artificial intelligence (AI) is expected to reshape labor markets, yet causal evidence remains scarce. We exploit a novel Swedish subsidy program that encouraged small and mid-sized firms to adopt AI. Using a synthetic difference-in-differences design comparing awarded and non-awarded firms, we find that AI subsidies led to a sustained increase in job postings over five years, but with no statistically detectable change in employment. This pattern reflects hiring signals concentrated in AI occupations and white-collar roles. Our findings align with task-based models of automation, in which AI adoption reconfigures work and spurs demand for new skills, but hiring frictions and the need for complementary investments delay workforce expansion. |
| Keywords: | Artificial intelligence; Labor markets; Hiring; Task content; Technological change |
| JEL: | J23 J24 O33 |
| Date: | 2025–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ratioi:0386 |
| By: | Caiza-Guamán, Pamela; García-Suaza, Andrés; Sepúlveda Rico, Carlos |
| Abstract: | The green transition is expected to be one of the most significant forces shaping labor markets in the incoming years. As economies shift toward cleaner technologies, green jobs will expand, while employment in high-emission sectors will either decline or move into other sectors, depending on skill transferability and policy design. In this context, the ability of workers to transition between green and non-green jobs will be crucial to ensure a just labor market adjustment. Labor transitions into and out of green jobs remain understudied, particularly in developing economies where data constraints limit empirical analysis. This paper addresses this gap, using household survey data and a synthetic panel approach to estimate the probability of labor transitions employs a skills-based green index. The results reveal a high degree of labor market persistence, explained by the role of skills in shaping mobility, and show a wage premium of 10.6% for green occupations compared to their non-green counterparts. These findings have important policy implications for ensuring a just energy transition. Given the observed rigidities in green labor mobility, targeted upskilling and reskilling programs are important to enabling non-green workers to acquire the necessary skills for green jobs. |
| Keywords: | Green jobs, labor mobility, wage inequality, just transition, informality |
| JEL: | J21 J24 Q52 J62 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1693 |
| By: | Anton Barabasch; Kamila Cygan-Rehm; Andreas Leibing |
| Abstract: | This paper investigates the long-run consequences of a later school entry for personality traits. For identification, we exploit the statutory cutoff rules for school enrollment in Germany within a regression discontinuity design. We find that relatively older school starters have persistently lower levels of neuroticism in adulthood. This effect is entirely driven by women, which has important implications for gender gaps in the labor market, as women typically score significantly higher on neuroticism at all stages of life, which puts them at a disadvantage. Our results suggest that family decisions regarding compliance with enrollment cutoffs may have lasting implications for gender gaps in socio-emotional skills. |
| Keywords: | school starting age, personality, socio-emotional skills, education |
| JEL: | I21 I28 J24 D19 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12273 |
| By: | Manh-Duc Doan (Development and Policies Research Center (DEPOCEN)) |
| Abstract: | Exploiting a quasi-natural experiment–the Vietnam-U.S. Bilateral Trade Agreement (BTA)–I investigate the impact of trade liberalization on children's human capital investment in Vietnam. Using regional variation in export tariff uncertainty due to the BTA, I find that children in provinces more exposed to tariff reductions were more likely to engage in work rather than attend school, and this effect persisted for 20 years after the BTA. Additionally, the effects were more pronounced among boys, older children, rural children, and those with less-educated parents. These negative effects are driven by the increase in job opportunities, i.e., the child labor incidence, and the wage premium in the higher exposure provinces. The findings indicate that trade liberalization has increased the opportunity cost of education. These results remain robust across various alternative estimations. |
| Keywords: | trade agreement, tariff reduction, schooling, child labor, Vietnam |
| JEL: | F14 F16 J24 O12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0125 |
| By: | Aggela Papadopoulou; Giorgos Gouzoulis |
| Abstract: | This paper examines the Black-White pay gap in the United States from 1989 to 2024 using quarterly data from the Bureau of Labor Statistics and the Federal Reserve’s Distributional Financial Accounts. Building on existing political economy research, which suggests that personal debt reduces workers’ bargaining power by making them more risk-averse in wage negotiations - particularly when job loss threatens their ability to service debt - this study argues that racial discrimination in both personal credit markets and wage negotiations disproportionately disciplines racialized social groups. Regression analysis shows that rising household debt liabilities-to-assets ratios for Black households and a higher share of white business owners have crucially contributed to the persistent wage gap between Black and White Americans. Interestingly, interacting the two coefficients shows that a higher share of white businesses slightly mitigates the effect of debt held by Black workers on the black-white earnings gap. This potentially implies that, despite discriminatory practices, white businesses might represent a relatively more stable employment option for indebted Black workers, thereby reinforcing a vicious cycle of self-perpetuating racialized economic inequality. |
| Keywords: | Racial Pay Gap; Personal Debt; Household Financialization; United States |
| JEL: | B50 J15 J31 J70 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2523 |
| By: | Asbjoern Juul Petersen (Department of Economics, University of Copenhagen) |
| Abstract: | In this paper, I investigate the effects of offering conditional student aid to foreign students on their labor supply in Denmark. I utilize a natural experiment created by an EU court ruling in 2013, deciding that foreign students had the right to a monthly student aid subsidy on equal terms with Danish students provided they work 10-12 hours per week, alongside their studies. I hypothesize, that this ruling can potentially increase labor supply of foreign students along three margins: i) A higher inflow of foreign students, ii) An increased labor supply during studies, and iii) An increased labor supply after studies. I use administrative data from Statistics Denmark to test these hypotheses. While I find an increased labor supply of foreign students during their studies, my results do not point to an increased inflow of students nor to an increased labor supply after ended studies. |
| Keywords: | Labor supply, foreign students, student aid |
| JEL: | J22 J61 H52 |
| Date: | 2025–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:kud:kucebi:2513 |
| By: | Ihsaan Bassier; Joshua Budlender |
| Abstract: | When firm productivity or product demand rises, workers typically share in the gains through higher wages or expanded employment. We show that for firms under monopsony with a binding minimum wage, this link from firm gains to worker outcomes breaks sharply. Revenue-productivity improvements raise revenues but not wages or employment: firms simply maintain the minimum wage and absorb the gains into higher wage markdowns. We find compelling evidence for these predictions using South African administrative data, based on a cross-sectional kink design as well as within-firm responses to internal and shift-share trade shocks. These results reveal a previously overlooked monopsonistic margin - productivity -induced markdown adjustment - and we show using a structural model that this substantially diminishes the intended returns of policies such as employment subsidies. |
| Keywords: | Monopsony, Rent-sharing, Minimum wage, Firm productivity |
| Date: | 2025–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2134 |
| By: | Pau Roldan-Blanco; Josep Pijoan-Mas |
| Abstract: | We study how the co-existence of fixed-term (FT) and open-ended (OE) contracts shapes firm dynamics, firm selection, worker allocation, aggregate productivity, and output. Using rich Spanish administrative data, we document that the use of fixed- term contracts is very heterogeneous across firms within narrowly defined sectors. Particularly, the relationship between the share of temporary workers and firm size is positive within firm but negative between firms. To explain these facts, we write a model of firm dynamics with technology heterogeneity, search-and-matching frictions, and a two-tier labor market structure. Our model emphasizes a key trade-off between contracts, namely, that while FT contracts give flexibility to firms, they also create more worker turnover, which is costly through the need to hire new workers and through the loss of firm-specific human capital. We find that limiting the use of FT contracts decreases the share of temporary employment and increases aggregate productivity —as better firm selection offsets increased misallocation of workers— but it also increases unemployment, output, and welfare. |
| Keywords: | dual labor markets, firm dynamics, temporary contracts, unemployment |
| JEL: | D83 E24 J41 L11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1531 |
| By: | Gorny, Paul M.; Schäfer, Louis |
| Abstract: | We study human-robot collaboration in a controlled experiment run in a realistic production environment. Participants completed a sequential task in pairs, where one worker (Worker 1) decided whether to pass intermediate components to a coworker or not. Depending on the treatment, the coworker was either another human participant or a physical industrial robot. The coworker-setup was either static or adaptive, with adaptive coworkers' productivity being influenced by Worker 1's performance in the task. We find strong evidence of robot aversion: workers were significantly less likely to pass intermediate products to their coworkers in the robotic as compared to the human treatments. This was despite overall productivity was identical across treatments. In a subsequent responsibility attribution task, participants also attributed greater responsibility to the robots, indicating a systematic bias in social evaluation of machine coworkers. Adaptivity only marginally affected these outcomes. Our results demonstrate that cooperation and responsibility attribution in hybrid teams depend not only on performance but also on social perceptions of artificial agents, highlighting behavioural frictions that may constrain the effective integration of robots into human work environments. |
| Keywords: | Human-robot collaboration, Responsibility attribution, Robot aversion, Adaptivity, Automation, Experimental methodology |
| JEL: | C91 J24 O33 |
| Date: | 2025–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126663 |
| By: | Anais Galdin; Jesse Silbert |
| Abstract: | Large language models (LLMs) like ChatGPT have significantly lowered the cost of producing written content. This paper studies how LLMs, through lowering writing costs, disrupt markets that traditionally relied on writing as a costly signal of quality (e.g., job applications, college essays). Using data from Freelancer.com, a major digital labor platform, we explore the effects of LLMs' disruption of labor market signaling on equilibrium market outcomes. We develop a novel LLM-based measure to quantify the extent to which an application is tailored to a given job posting. Taking the measure to the data, we find that employers have a high willingness to pay for workers with more customized applications in the period before LLMs are introduced, but not after. To isolate and quantify the effect of LLMs' disruption of signaling on equilibrium outcomes, we develop and estimate a structural model of labor market signaling, in which workers invest costly effort to produce noisy signals that predict their ability in equilibrium. We use the estimated model to simulate a counterfactual equilibrium in which LLMs render written applications useless in signaling workers' ability. Without costly signaling, employers are less able to identify high-ability workers, causing the market to become significantly less meritocratic: compared to the pre-LLM equilibrium, workers in the top quintile of the ability distribution are hired 19% less often, workers in the bottom quintile are hired 14% more often. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.08785 |
| By: | Tizian Dick (University of Regensburg, Institute of Economics and Econometrics) |
| Abstract: | This paper provides new evidence on Germany?s third?pillar pensions by separating market entry from within-pillar product choice and by introducing an aggregated subsidized margin that summarizes selection into Riester/Basis relative to purely unsubsidized Private plans. Using recent, nationally representative microdata (2019?2023), we estimate a two-stage framework: a binary participation model and, conditional on entry, a multinomial product-choice mode. Two contributions are distinctive. First, we provide the first unified evidence on Basis and unsubsidized Private contracts alongside Riester, moving beyond a Riester-centric literature. Second, our subsidized margin offers a policy-relevant measure of how fiscal incentives reallocate choices within the pillar, invariant to base-category normalization. At the extensive margin, participation is governed primarily by labor-market attachment and position in the income distribution. Households with stable earnings and strong links to formal employment are much more likely to enter, while low and irregular earners remain underrepresented. Participation exhibits a reverse gender gap: women outpace men in third-pillar take-up. At the intensive margin, choices track institutional design. Higher incomes tilt selections away from allowance-based contracts and toward tax-deductible alternatives, with the self-employed showing a marked preference for the latter. On the subsidized margin, income effects largely offset in the aggregate, yet the nature of earnings remains decisive. These findings point to policy that targets entry frictions and preserves product neutrality because participation and not within-pillar reallocation is the margin on which the system binds. |
| Keywords: | Third-Pillar Pension, Riester Pension, Basis Pension, Rürup Pension, Private Pension, Retirement Saving, Subsidies and Tax Incentives, Household Finance, Extensive and Intensive Margins |
| JEL: | D14 G22 H55 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:15416970 |
| By: | Marco Amendola; Francesco Ruggeri |
| Abstract: | This paper empirically examines the relationship between functional income distribution and labor productivity. In particular, it tests the hypothesis that a higher wage share promotes productivity growth by pushing firms to invest and innovate in order to preserve profit margins. Using panel data for OECD countries, the results provide strong support for this mechanism: increases in the wage share are associated with significantly higher labor productivity growth. The magnitude of the effect suggests that the contraction of wage shares in many advanced economies may explain an important part of their recent productivity slowdown. The analysis further shows that this positive link operates primarily through capital deepening, consistent with the view that wage pressures incentivize investment in laborsaving technologies. By contrast, no robust relationship is found between the wage share and Total Factor Productivity. |
| Keywords: | Labor productivity; Wage share; Productivity slowdown; Capital deepening; Induced technical change Jel Classification: C23 E25 D33 O30 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:usi:wpaper:935 |
| By: | Eduardo Azevedo; Florian Scheuer; Kent Smetters; Min Yang |
| Abstract: | Recent proposals to tax unrealized capital gains or wealth have sparked a debate about their impact on entrepreneurship. We show that accrual-based taxation creates two opposing effects: successful founders face greater dilution from advance tax payments, whereas unsuccessful founders receive tax credits that effectively provide insurance. Using comprehensive new data on U.S. venture capital deals, we find that founder returns remain extremely skewed, with 84% receiving zero exit value while the top 2% capture 80% of total value. Moving from current realization-based to accrual-based taxation would reduce founder ownership at exit by 25% on average but would also increase the fraction receiving positive payoffs from 16% to 47% when tax credits are refunded. Embedding these distributions in a dynamic career choice model, we find that founders with no or moderate risk aversion prefer the current realization-based tax system, while more risk-averse founders prefer accrual-based taxation. We estimate that a 2% annual wealth tax has a similar impact on dilution as taxing unrealized capital gains, but produces no risk-sharing benefits due to the absence of tax credits in case of down rounds. |
| Keywords: | capital gains tax, wealth tax, venture capital, entrepreneurship, dilution |
| JEL: | G3 H2 J3 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12275 |
| By: | Kikuchi, Tatsuru |
| Abstract: | Spatial econometrics lacks principled methods for measuring minimum wage spillovers. Existing approaches assume arbitrary functional forms without theoretical justification, preventing researchers from answering basic questions: How far do effects reach? Through which channels? At what speed? This paper derives spatial treatment effects from first principles using Navier-Stokes equations. Three theoretical predictions emerge and are validated empirically. First, treatment boundaries exhibit self-similar scaling, growing proportional to the square root of elapsed time as predicted by diffusion theory (estimated exponent: 0.500, standard error: 0.001). Second, spatial weights follow Modified Bessel K-zero functions, the exact Green's function solution to the two-dimensional Helmholtz equation. This theoretically-derived specification fits observed spillover patterns substantially better than exponential, Gaussian, or power-law alternatives commonly assumed in applied work (R-squared: 0.99 versus 0.35). Third, network consolidation paradoxically increases rather than dampens wage volatility during stress periods, with consolidation-volatility correlation rising from near-zero to positive 0.0067 following COVID-19. Using 64, 421 county-quarter observations from 2018 to 2023, I estimate characteristic spillover distance of 100 miles with cumulative effects reaching 0.44 log points over four quarters. Economic network linkages dominate geographic proximity by factor of eight, demonstrating that institutional connections matter more than physical distance. Spatial decay parameters increased 27 percent during COVID-19 (from 0.0155 to 0.0196), shrinking effective spillover radius from 65 to 51 miles and confirming time-varying dynamics predicted by perturbation theory. The framework provides concrete policy guidance. Regional minimum wage coordination should encompass 100-mile radius under normal conditions, contracting to 65 miles during crises. For Japan's minimum wage reform targeting 1, 500 yen per hour by 2030, spillovers from Tokyo will substantially affect surrounding prefectures within 160 kilometers. Self-similar scaling implies effects reach half of final magnitude within one year but continue expanding indefinitely, requiring multi-year coordination frameworks. |
| Keywords: | Spatial wage spillovers, Self-similar scaling, Network fragility, Modified Bessel functions, Minimum wage policy, Japan |
| JEL: | C21 D85 J31 J38 R23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126722 |
| By: | Carlo Alcaraz; Nicolas Amoroso; Rodolfo Oviedo Moguel; Alex Rivadeneira; Brenda Samaniego de la Parra; Horacio Sapriza |
| Abstract: | We study the drivers and real effects of credit supply shocks during a major non-financial recession, the COVID-19 crisis. Using data on the universe of bank loans in Mexico, we isolate the supply-driven component of credit variations. Credit supply conditions deteriorated in this period, driven by banks' heightened risk aversion. Using matched employer-employee records, we find that negative credit supply shocks reduced firms' employment and increased their exit probability. These effects are larger among financially constrained firms and workers with lower separation costs. In the aggregate, negative credit shocks account for one-third of the total employment decline for small firms. |
| Keywords: | Recession; banking; credit supply; risk tolerance; rm dynamics; job destruc tion |
| JEL: | G21 E44 E51 J23 |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedrwp:102097 |
| By: | Liya WANG; Yingchao ZHANG; Yukiko ASAI; Hideo OWAN |
| Abstract: | How do personality traits affect promotion outcomes? We study the role of personality in career advancement using detailed personnel records from a business solutions firm. Employees with higher levels of extraversion are significantly more likely to be promoted, while those with higher neuroticism scores face lower promotion probabilities. Gender differences in extraversion partly explain the observed gender gap in promotions. Role and task assignments largely mediate the link between personality and promotion, with employees who receive “stretch assignments†being promoted faster. Our evidence points to both productivity-related and non-productivity-related factors underlying this relationship. First, interpersonal skills are the key determinant of role and task assignment, and extraverts possess superior skills from the outset, enabling them to continue excelling after promotion. Second, extraverts have an advantage in building relationships with supervisors, which may lead to better developmental assignments based on trust and favoritism, yet supervisors with more extraverted subordinates do not perform better. Our findings illustrate how personality-driven social dynamics influence firms’ internal labor markets, offering insights into how assignment and promotion policies affect leadership pipelines and organizational equity. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25105 |
| By: | Malik Curuk; Jérôme Héricourt; Gonzague Vannoorenberghe |
| Abstract: | Estimating the effects of goods and labor market power on firm pricing behavior is difficult since firm-level output and employment are jointly determined. We exploit the variation in the sets of destination countries across exporting firms, which enables us to separately identify the effects of goods and labor market power on pass-through rates by reducing the comovement of firm size across specific sales markets and in its local labor market. We present a theoretical framework in which multi-destination exporters are oligopolists in their goods markets and oligopsonists in their local labor market. Combining firm-level trade data per product-destination with establishment-level balance sheet data and employment zone identifiers for the universe of French firms from 1995 to 2015, we construct theoretically sound proxies for labor and goods market power and jointly estimate their effects on export prices using exchange rate shocks as the source of identifying variation in firm demand. Consistent with the model's predictions, we provide robust evidence that firms with stronger labor market power have a lower pass-through of changes in their effective exchange rate into export prices conditional on their goods market power. The findings indicate a sizable degree of labor market power for French exporters. |
| Keywords: | Labor Market Power;Goods Market Power;Exchange Rate;Pass-through |
| JEL: | F16 F31 J42 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-15 |
| By: | Quang-Thanh Tran (Development and Policies Research Center (DEPOCEN)); Akiomi Kitagawa (Graduate School of Economics and Management, Tohoku University) |
| Abstract: | This paper employs an overlapping generations model to analyze how placing the burden of caring for both elderly parents and children on the working generation shapes fertility and other economic outcomes. In the model, fertility decisions create intergenerational spillovers. When one generation has fewer children, the next generation faces a heavier caregiving burden for its elderly parents, which in turn discourages childbearing. The model reveals sharply different long-run trajectories depending on the time intensity of caregiving. If care demands are moderate, sustainable growth remains feasible despite these externalities. However, when care becomes highly time-intensive, fertility declines, labor supply contracts, and the economy risks falling into a ``nursing hell, " where most time is devoted to caregiving. Policy measures, such as child allowances, can alleviate this dynamic by expanding the number of siblings and reducing the per-capita caregiving burden. Yet if care demands are extremely high from the outset, even such interventions cannot avert structural collapse. |
| Keywords: | dual caregiving, endogenous fertility, overlapping generations, sustainability |
| JEL: | E13 J13 J14 J22 J24 O11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0325 |